Presentation Acquisition of GLG
Presentation Acquisition of GLG
Presentation Acquisition of GLG
17 May 2010
Disclaimer
This document has been prepared solely for its use at the presentation to investors to be made on 17 May 2010 (the "Presentation") in connection with the proposed acquisition (the Acquisition) by Man Group plc ("Man Group") of all of the issued and to be issued shares of GLG Partners, Inc. (GLG). This document and the Presentation are being made available to you solely for your information in connection with the Acquisition. The information and opinions contained in this document and the Presentation do not purport to be comprehensive. This document should be read in conjunction with, and subject to, the full text of the announcement dated 17 May 2010 regarding the Acquisition (the "Announcement"). Unless otherwise indicated, terms and expressions defined in the Announcement bear the same meanings in this document. This document and the Presentation are not intended to, and do not constitute, or form part of, an offer to sell or an invitation to purchase or subscribe for any securities, or a solicitation of any vote or approval in any jurisdiction. No representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this document and the Presentation is made by either Man Group or GLG and no responsibility, obligation or liability (whether direct or indirect, in contract, tort or otherwise) is accepted by it, them, their affiliates or their respective officers, employees, agents or advisers in relation to it or any other information made available in connection with the Presentation. Certain statements in this document and the Presentation are or may be forward-looking statements with respect to financial condition, results of operations, businesses or integration of Man Group and GLG. By their nature, forward-looking statements involve a number of risks, uncertainties or assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties or assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained within these presentation materials regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Undue reliance should not be place on forward-looking statements, which speak only as of the date of this document and the Presentation. Neither Man Group nor GLG is under any obligation (except as required by law or regulation) to revise, update or keep current any information contained in this document or in the Presentation, regardless of whether that information is affected as a result of new information, future events or otherwise. All written and forward-looking statements attributable to Man Group or GLG or persons acting on their behalf are qualified in their entirety by these cautionary statements. This document is being distributed in the United Kingdom only to those (a) who have professional experience in matters relating to investments who fall within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or (b) high net worth entities and other persons to whom it may otherwise lawfully be communicated falling within Article 49(1) of the Order (all such persons together being referred to as relevant persons). Any person who is not a relevant person should not act or rely on this Presentation or any of their contents. Any investment or investment activity to which the Presentation and this document relate is available only to relevant persons and will be engaged in only with relevant persons.
GLG and its directors and executive officers may be deemed participants in the solicitation of proxies from GLGs stockholders. Information about the directors and executive officers of GLG and their ownership of GLG shares is set forth in the proxy statement for GLGs 2010 Annual Meeting of Shareholders. A free copy of this document may be obtained by contacting the SEC or GLG as indicated above. GLGs stockholders may obtain additional information about the interests of GLGs directors and executive officers in the proposed transaction by reading GLGs proxy statement for the special meeting when it becomes available.
Values GLG equity at c. $1.6 billion Expected to be earnings accretive in FY 20122, 3 and earnings neutral in FY20112, 3 Potential annual cost savings of $50 million already identified, with a cost to deliver of approximately $25 million Decision on Man dividend level for FY 2011 brought forward: Board intends to recommend full year dividend of at least 22 cents per share Intends to recommend final dividend for 2010 of 24.8 cents per share, giving a maintained total dividend of 44 cents per share
Man Group full year results to be published on 27 May Target completion end September 2010 subject to regulatory approval and approval of GLG and Man shareholders
1. Please see note 1 in the Important Information section of this document. 2. Please see note 2 in the Important Information section of this document. 3. Before amortisation of intangibles arising from the transaction.
Combination benefits
Benefits
Quantitative investment styles + Structuring + Distribution
Strategy
Focus on superior uncorrelated returns New sources of return for investors Potential annual cost savings of $50 million
Investors
FUM and product growth Earnings accretive in FY 20121, 2 Earnings neutral in FY 20111, 2
1. Please see note 2 in the Important Information section of this document. 2. Before amortisation of intangibles arising from the transaction.
Investment management
Hedge Funds Single-manager strategies
AHL FUM $21.1BN GLG alternative strategies FUM $11.4bn Credit* FUM $3.4bn
Fully integrated
Distribution
Source: GLG Q1 2010 earnings release and Man pre-close trading update for the financial year ending 31 March 2010. * Ore Hill/ Pemba. ** Man Multi-Manager.
100 %
Man AHL Diversified plc1 Gold global Opportunity GLG Global opportunitiesFund2
80 %
20 %
0%
-20 %
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
10
Source: Man database and Bloomberg. Potential investors should note that alternative investments can involve significant risks and the value of an investment may go down as well as up. There is no guarantee of trading performance and past performance is no indication of current or future performance/results. Returns may increase or decrease as a result of currency fluctuations. 1. Man AHL Diversified plc is valued weekly; however, for comparative purposes, statistics have been calculated using the last weekly valuation for each month. 2. GLG Global Opportunity Fund, Share Class Z.
Long only, equity long/short, managed futures, global macro, emerging markets
Equity long/short is closest convergence bridge to mainstream markets e.g. UCITS ($7 trillion)
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Man: well established $1.4 billion onshore fund in Hong Kong Man: $160m raised in first fund of managed futures fund in Taiwan
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Long only, equity long/short, managed futures, global macro, emerging markets
Equity long/short is closest convergence bridge to mainstream markets e.g. UCITS ($7 trillion)
Continued relevance of capital protection: focus on simpler structures GLGs versatile sources of return made available to Mans industry-leading structuring and distribution team
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6000
Annualised return 15.3 % 20.8 % 2.4 %
3000
18.3 % -17.7 %
19.7 % -18.7 %
15.6 % -51.9 %
1000 97 98 99 00 01 02 03 04 05 06 07 08 09 10
AHL/Man Multi-Manager Portfolio Pro Forma Man-IP 220 portfolio proforma1 1 AHL/GLG Portfolio Pro Forma2 AHL Gold Blended proforma World stocks World stocks
Source: Man database and Bloomberg. World stocks: MSCI World Index hedged to USD (price return). Both pro formas are for illustrative purposes only. No existing product has been created using the portfolio blends and methodology illustrated by these pro formas. Potential investors should note that alternative investments can involve significant risks and the value of an investment may go down as well as up. There is no guarantee of trading performance and past performance is no indication of current or future performance/results. Returns may increase or decrease as a result of currency fluctuations. Man AHL Diversified plc is valued weekly; however, for comparative purposes, statistics have been calculated using the last weekly valuation for each month. 1. The AHL/Man Multi-Manager Portfolio Pro Forma takes the fully funded net track records for Man Glenwood Holdings (MGH) and AHL Diversified PLC ("AHL") and applies them across the time series to a pro forma portfolio in the proportions 60% investment exposure through MGH and 100% investment exposure through AHL. 2. The AHL/ GLG Portfolio Pro Forma takes the fully funded net track records for GLG Global Opportunity Fund, Share Class Z (GO) and AHL and applies them across the time series to a pro forma portfolio in the proportions 60% investment exposure through GO and 100% investment exposure through AHL. This is similar to the investment exposure weighting in a typical Man IP220 structure, but with GO substituted for MGH. In both pro formas, a funding cost of USD 3 month LIBOR has been assumed and rebalanced back to the 60%/100% target proportions referred to above on a monthly basis.
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Long only, equity long/short, managed futures, global macro, emerging markets
Equity long/short is closest convergence bridge to mainstream markets e.g. UCITS ($7 trillion)
Continued relevance of capital protection: focus on simpler structures GLGs versatile sources of return made available to Mans industry-leading structuring and distribution team
Institutional market
Funding gaps driving increasing allocations to hedge Man + GLG offer a broad range of styles and managed account based solutions to meet institutional needs as they evolve, including in the US
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Complementary distribution
Join forces in the US Market Man through GLGs relationships with family offices, sovereign wealth funds and in Southern Europe
Man hotspot
GLG hotspot
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Transaction Summary
Cash consider to public shareholders of $4.50 per GLG share Share exchange offer to GLG Principals of 1.0856 Man shares per GLG share Values each GLG share at $3.501 Value capped at $4.251
Consideration
177 million of new Man shares to be issued1 Values GLG equity at c. $1.6 billion1 Expected to be earnings accretive in FY 2012 and earnings neutral in FY 20112, 3 Potential annual cost savings of $50 million already identified, at a cost to deliver of c. $25 million Pro forma capital excess of an estimated $300 million Principals committed to retain Man shares and stay invested in funds Stock lock-ins, commitments to roll fund investments, restricted covenants
Subject to shareholder approval by GLG and Man shareholders Standard regulatory and anti-trust approvals Absence of material adverse change Target end September 2010
1. Please see note 1 in the Important Information section of this document. 2. Please see note 2 in the Important Information section of this document. 3. Before amortisation of intangibles arising from the transaction.
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Consideration*
$1.0bn
$0.9bn
$0.9bn
Cash Consideration
Share Consideration 1
Less: Cash paid to Implied value to convert holders GLG shareholders, excluding potential synergies
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* Numbers are rounded for ease of presentation. ** Based on potential run-rate cost savings of $50m already identified, capitalised at 10.0x and taxed at 20%. Note: Cash consideration and share consideration as per offer announcement; cash paid to holders of convertible bonds equal to 66.5m shares on conversion multiplied by $4.50; current market capitalisation of GLG includes 251.2m shares of common stock and 58.9m exchangeable shares, all valued at GLGs closing share price on 14 May 2010 of $2.91. 1. Please see note 1 in the Important Information section of this document.
People
Combined investment team benefitting from broader, more diverse asset pool Alignment of interests through incentivisation structure Global sales force with access to a broader investment offering Total commitment from the Principals Magnet for talent going forward
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20
21
200
100
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Note: Performance is typically measured by the longest running share class in each fund. First GLG fund began trading in January 1997; as a result, indices are rebased to 100 as at 1 January 1997 with monthly data points through to 31 March 2010. Annualized returns are calculated on a basis of monthly pricing data. See the Appendix for a description of how dollar-weighted average returns are calculated.
GLG places heavy emphasis on fundamental research and tactical trading coupled with active risk management GLG manages a number of discretionary strategies: Credit / Convertibles Geography-focused: Emerging Markets Europe Global Japan North America UK
GLG Partners LP Best Fund over 10 Years Global Equity Fund GLG Performance Fund Winner 2009
Best Single Hedge Fund Manager for MultiStrategy Hedge Fund Operators
Winner 2008 Financial News
Macro / Special Situations GLG manages alternative, long only and UCITS III
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Note: Performance is typically measured by the longest running share class in each fund. Blended benchmark returns are calculated as the aggregate of the dollarweighted returns for the relevant benchmarks for each fund / managed account. In the event there is no relevant benchmark, an appropriate performance comparator is used. April 2010 dollar-weighted average returns are calculated based on estimated net asset values (NAVs) as at April 30, 2010 and exclude a number of SGAM UK accounts that cannot be priced until mid month.
Preserves core investment philosophy and client orientation We are committed to building the business as part of the new stronger group GLGs Principals will become significant shareholders in Man Group
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Funds under management (end of period) Net management fee income Net performance fee income Profit before tax and adjusting items Adjusting items Total profit before tax
Estimates for year ending 31 March 2010 $ 39.1bn 450m 80m 530m (20m) 510m
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Broker consensus estimates non-GAAP net income of $65.5 million for FY 2010 and $111.5 million for FY 2011
Source: GLG company disclosure. 1. Other non-GAAP adjustments including realised loss of available for-sale investments, cumulative dividend, amortisation of intangibles, tax effect of acquisition-related compensation expense and tax effect of amortisation of intangible assets.
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1200
1000
800 ($m)
895
341
340
236 85
391
29
1H 08 GLG Man
2H08
1H 09
2H 09
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Due diligence
GLG is NYSE listed; SEC and FSA regulated Significant existing public financial and operating disclosure An appropriate due diligence exercise has been carried out, including
Investment Performance and Teams Investor Base and Distribution Capability Incentivisation Legal Regulatory Finance and tax
30
31
Man Standalone Net Excess Capital 2 Less: Capital Funding Required Estimated Excess Capital
Source: Company disclosure. Numbers rounded to the nearest $50m. 1. Please see note 1 in the Important Information section of this document. 2. Man Group current standalone capital position as of 31 March 2010 with budgeted adjustments for the period to July 2010.
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Appendix
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Indicative timetable
Transaction announcement Man Group full year results announcement Shareholder circular published Man Group AGM and Q1 IMS Class 1 General Meeting to approve transaction Regulatory approvals (absent extensions) Closing 17 May 27 May June/early July 8 July July Q3 Target end September 2010
These dates are indicative only and will depend, among other things, on the regulatory timetable.
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0.45 0.60 0.75 0.72 0.14 0.48 0.60 -0.15 0.42 1.00
35
Source: Bloomberg. There is no guarantee of trading performance and past or projected performance is not a reliable indicator of future performance. Convertible arbitrage: Barclays Convertible Arbitrage Index. Distressed securities: Barclays Distressed Securities Index. Event driven: Barclays Event Driven Index. Equity long/short: Barclays Equity Long/Short Index. Equity market neutral: Barclays Equity Market Neutral Index. Global macro: Barclays Global Macro Index. Merger arbitrage: Barclays Merger Arbitrage Index. CTA: Barclay CTA Index. Fixed income arbitrage: Barclays Fixed Income Arbitrage Index. MSCI World: MSCI World Index hedged to USD (price return). Emerging markets: Barclays Emerging Markets Index.
Q1 2010 23,667
First quarter performance fees will generally be recognised when they crystallize on 30 June
Source: GLG company disclosure. 1. Other non-GAAP adjustments including realised loss of available for-sale investments, cumulative dividend, amortisation of intangibles, tax effect of acquisition-related compensation expense and tax effect of amortisation of intangible assets.
36
For the month of April 2010, dollar-weighted average returns are based on estimated month-end NAVs of the
funds listed above as at April 30, 2010.
37
For the month of April 2010, dollar-weighted average returns are based on final and estimated month-end NAVs
of the funds listed above as at April 30, 2010.
38
For the month of April 2010, dollar-weighted average returns are based on final month-end NAVs
of the funds listed above as at 30 April 2010.
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- GLGs external FoF products may invest a small proportion of their assets in other GLG
external FoF products
- GLGs single-manager alternative strategy funds may invest some proportion of their assets
in other GLG single-manager alternative strategy funds
- GLGs long only strategy funds may invest some proportion of their assets in other GLG
long only strategy funds
Gross FUM presentation includes assets invested from other GLG Funds Net FUM presentation is net of assets invested from other GLG Funds
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2007 GAAP compensation, benefits and profit share ($) Less: Acquisition-related compensation expense1 ($) Non-GAAP CBP ($) 1,211,212 (639,077) 572,135
1. Includes payroll taxes accrued on unvested shares and paid on vested shares and dividends paid on unvested shares equaling no greater than $2.0 million in aggregate for each of the above periods.
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